Sharing Gains Currency on Internet

Polonius was wrong. “Neither a borrower nor a lender be” he advised Laertes in Hamlet. “For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry.” Far from dulling the edge of husbandry, borrowing and lending is spawning a new multi-billion-dollar industry called collaborative consumption, proponents of the movement claim, adding that it changes our very relationship with the world around us.

The doyenne of the movement, Rachel Botsman, co-author of the book “What’s Mine Is Yours: The Rise of Collaborative Consumption” defines collaborative consumption as:

“the rapid explosion in traditional sharing, bartering, lending, trading, renting, gifting, and swapping reinvented through network technologies on a scale and in ways never possible before.”

How big the sector will be is anyone’s guess; estimates go as high as $100 billion. U.S. analysts Frost and Sullivan have estimated that just one sector—the car sharing industry in North America—will be worth $3.3 billion by 2016. Last year Airbnb joined the exclusive $1 billion valuation club.

Brent Hoberman of venture capital firm Profounders says this is an attractive market and one in which it has made a number of investments. “It plays in lots of trends; unused assets, people not being as materialistic, and it is also green,” he says.

Of course the idea of people sharing rides or swapping homes is nothing new; what is new is the scale the internet brings to create real companies. But that scale brings its own problems, one of which is liquidity, i.e. having enough buyers and sellers, or borrowers and lenders.

Four-year-old Airbnb, which struggled to gain traction in its early days, now claims more than 100,000 properties in 192 countries, and over 19,000 cities worldwide. It has cracked the problem.

A rather more tricky one to solve was that facing Nicolas Brusson, the co-founder and COO of the Paris-based BlaBlaCar, a ride-sharing service that has recently launched in the U.K., but which is already the major player in France and Spain and a key player in Italy.

“It is really hard to create liquidity in these marketplaces,” says Mr. Brusson. “You are trying to match people in three dimensions: where they are starting from, where they are going to, and the time. We struggled to create liquidity at the start.”

For them the salvation came in one of the not infrequent French strikes, this one in September 2007. With trains not running, people were looking for alternative transport; it was the turning point for BlaBlaCar.

A far bigger problem is the question of trust. Are you really going to lend your home to a complete stranger? Are you going to ride in a car for several hours with someone you have never met, and may never meet again?

While it is highly unlikely he or she is going to be an ax murderer, they might just be incredibly dull, or have personal hygiene issues.

All of the companies have invested in substantial trust mechanisms. Onefinestay has many levels of verification, including taking a swipe of your credit card. BlaBlaCar uses a combination of things like your Facebook profile and credit history, and has a mechanism to verify your cellphone. It also uses a community rating system so people who use the service can rate their experience. No one item is definitive, but together they help build levels of confidence.

“Trust is as much about an emotional journey as it is a rational one,” says Greg Marsh, CEO of Onefinestay. “It doesn’t matter how much you do—if people are not psychologically prepared to make the leap it doesn’t matter what you do, they won’t make the jump.”

That’s a point echoed by Ms. Botsman. “What we have seen is that once people start to use services, they tend to use formal trust mechanisms less and less.”

Ms. Botsman says better trust mechanisms are required. She predicts the growth of trust ratings agencies that can aggregate your standings on sites like Amazon, eBay and elsewhere. “A PayPal of trust,” she calls it.

But why now? Why are these services taking off now? Is it because of a fundamental shift, or simply because many people are hard up, and that spare bedroom could be put to better use?

Ms. Botsman is quite clear. “The recession has created an attitude shift—people have become more cost conscious but they are also rethinking wealth and ownership. That is why I think this is not just a trend, but the start of a transformation.”

Sharing does tap into some very long-established patterns of human behavior that help bind societies.

Genevieve Bell is Director of Interaction and Experience Research at Intel. She says that sharing is a fundamental human, cultural, thing. “What makes us human is that we use goods, services [and even ideas and perhaps emotional affects] to create relationships with others. Sharings and exchanges create ‘social indebtedness’ to ensure long-term relationships and demand reciprocities.”

The internet has been blamed for atomizing society. Collaborative consumption may be helping reverse that trend.

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